Thursday, April 18, 2013

ALEC Policy Failure Costs Calif $700 Million Each Year

From Bloomberg:
Since 1986, California has used an “enterprise zone” program in an effort to spur investment and job creation in specified areas. The state awards tax credits, more than $700 million a year as of 2010, to businesses that hire designated kinds of workers within the zones. The program is popular with businesses and local officials.

Unfortunately, it doesn’t appear to create jobs. A 2009 study by the Public Policy Institute of California found no difference in job creation between zoned and comparable unzoned areas. Given this finding, Governor Jerry Brown wisely tried to ax the program in his 2011-2012 budget, and is now working to scale it back.

Last month, the Los Angeles City Council passed a resolution stating that a reduction in the enterprise zone program would be “devastating to thousands of Los Angeles businesses.” The mayors of Los Angeles and eight other large California cities have since signed a letter opposing new restrictions. If the PPIC report is any indication, they’re in the wrong. The hundreds of millions of dollars the state would save by ending the program could be put to use in ways that would make Los Angeles, and the rest of California, a better place to do business.

“Enterprise zones are an ALEC concept -
Part VI: Empowerment, Opportunity and Urban Poverty
Volume I: Sourcebook of American State Legislation 1995
The Enterprise Zone Act establishes zones in depressed areas that have reduced taxes and removal of unnecessary government barriers to the production and earning of wages and profits and the creation of economic growth.

And just what would the corporations receive for doing this?  Here’s an example from the ALEC Enterprise Zone Act”.
    shall receive a tax credit equivalent to 50 percent of the state and local tax on their income.

State and local income taxes on capital gains from the sale of qualified property within the zone are hereby abolished.

All sales taxes in transactions by qualified businesses shall be reduced by 100 percent.

Building materials used in remodeling, rehabilitation, or new construction in a zone, and new and used equipment and machinery purchased by qualified businesses for use in the zone, certified by the purchaser to be used for these purposes, shall be exempt from sales and use taxes.

All property taxes within an Enterprise Zone shall be reduced by 50 percent ratable over the first two years

Motor vehicles purchased and used by qualified businesses located in the Enterprise Zone shall be exempt from any motor vehicle usage tax.

All unemployment insurance taxes on qualified businesses shall be reduced by 100 percent.

All interest payment on loans made to qualified businesses or on mortgage loans made on any property within an enterprise zone shall be exempt from all state and local taxes,
Pretty nice deal for ALEC corporate profit sector members – eh?????????

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